30. As noted in the previous chapter, we are
only part way through the first full year of the implementation
of QIPP plans and the Spending Review settlement. As such, it
is not yet possible to conduct a full analysis of the impact and
effectiveness of these measures. In the course of our evidence,
however, we heard concerns about a number of trends arising from
the Government's programme. In this chapter we note the most significant.
A common thread running through these issues is the marked disconnect
between the concerns expressed by those responsible for delivering
services, and the relative optimism of the Government.

Progress on the QIPP programme

SETTING AND ACHIEVING TARGETS

31. The Nicholson Challenge requires the NHS
as a whole to make 4% efficiency savings, year on year.[29]
However, this will require many NHS organisations in the acute
sector to aim for higher savings, due to the pressure placed on
this sector through reductions in the tariff.[30]
Monitor, the independent regulator of NHS foundation trusts, noted
in its review of trusts' annual plans that trusts have set their
most challenging Cost Improvement Plans to date, aiming to achieve
a 4.4% reduction in operating costs. Monitor warned that "maintaining
and improving quality whilst delivering this level of savings
represents a significant challenge and a potential risk for trusts".[31]
Monitor has also raised the levels of expected efficiencies that
it uses to inform its financial assumptions when assessing applicant
foundation trusts and when risk rating investments and transactions
undertaken by foundation trusts.[32]

32. Similarly a King's Fund's survey of a panel
of finance directors from a variety of NHS organisations found
that this pattern was extending beyond just the foundation trust
sector:

All but one of the provider organisations on the
panel have a productivity target of 4% or more, and over half
have a target of 6% or more. This confirms a recent Health
Service Journal survey of 131 trusts conducted in April, which
found a similar range of targets with an average target of 6%.[33]

33. Mike Farrar of the NHS Confederation told
us that:

82% of our membership believe that it would be possible
to remain financially stable this year, but they are worried about
future years. There is a strong sense that most of this year's
position on the money is being dealt with by taking account of
reserves or a cushion that was in the system previously.[34]

It is not just the reserves either. It is non-recurrent
savings. It is savings that you will not be able to make again
next year. So, although our members did feel, when we surveyed
them, that they would be able to make it this year, it gets increasingly
tough.[35]

35. She told us that, in her view, efficiencies
would inevitably threaten quality in the longer term:

This year it feels like you can keep quality up and
it would not be compromised by the savings. The vast majority
of our members feel confident that they are going to make the
savings this year. When you start projecting this two or three
years out, then that balance between quality and savings becomes
more finely balanced.[36]

36. The Secretary of State acknowledged that
the acute sector was facing "unprecedented pressure"
and that it was possible that the "extent of the financial
challenge" could lead some foundation trusts to use their
reserves to meet their financial objectives.[37]

37. Sir David Nicholson insisted that the "vast
majority" of changes being made under the 'operational efficiency'
heading (some 40% of planned savings) were recurring[38]
and that the 40% of savings planned from national action were
"all recurring", although he acknowledged that this
would only be the case if pay levels did not "bounce back"
in future years.[39]
Sir David did note, however, that even as more data became available
it would be difficult to get a definitive picture on whether savings
were recurring or not, "partly because people describe things
in different ways".[40]

38. It is far from certain whether the targets
set out in saving plans will be met, even with trusts stretching
themselves. For example, on the King's Fund July panel of finance
directors, about half of those with a target of 4% or more were
uncertain of meeting it.[41]
Similarly, a July 2011 Health Service Journal survey of
244 senior managers and finance directors found that 55% were
not confident that their organisation could make the savings needed.
Past performance in this area is not always encouraging: in 2010-11
some 26 acute trusts delivered less than 80% of their cost improvement
targets.[42] The Audit
Commission, in its audit of 2010-11 cost improvement plans from
a sample of PCTs and NHS Trusts, found that "plans have been
more ambitious than in 2009-10 but achievement against them has
worsened":

In 2010/11, 19 per cent of both NHS trust and PCT
plans were not achieved. Overall, 23 per cent of the savings achieved
were non-recurrent (2009/10 figures are not available). This means
that NHS bodies will need to find extra savings in 2011/12 to
match the one-off savings made in 2010/11, to reach the target
of £20 billion recurrent savings.[43]

39. We were told in evidence that there was to
be a return to some year-end flexibility over spending.[44]
We welcome this development, because we believe it removes the
well known perverse incentives that arise from excessive year-end
inflexibility. However, this principle seems to be undermined
by the case over the Christmas period of the Department of Health
asking for bids for £300m of capital funding for projects
beginning this financial year and ending in 2012-13. The Department
asked for applications by 12 January for projects which would
require at least £5m.[45]
At a time
when all NHS bodies are being required to make efficiencies and
need to plan strategically to reshape services it is unhelpful
for the Department of Health to require them to make bids for
capital funding to such short deadlines and without adequate preparation.

40. It remains too early fully
to assess the types of savings being made in 2011-12, the first
year of the QIPP programme. The Government remains confident that
savings are on track. Nevertheless, we have heard strong concerns
from the NHS Confederation, the Foundation Trust Network[46]and the King's Fund,[47]
among others, about the ability of NHS organisations firstly to
meet their saving plans and second, to do so in a manner that
is sustainable and releases further savings in future years. We
are concerned that there appears to be evidence that NHS organisations
are according the highest priority to achieving short-term savings
which allow them to meet their financial objectives in the current
year, apparently at the expense of planning service changes which
would allow them to meet their financial and quality objectives
in later years.

PROGRESS ON SERVICE RECONFIGURATION

41. The evidence presented by the Department
of Health states that reconfiguration of services is an essential
component of long-term sustainable change and is intended to account
for 20% of QIPP savings.[48]

42. The Committee believes that service reconfiguration
needs in fact to account for significantly more than 20% of QIPP
savings and that it is hard to reconcile an estimate of 20% with
the evidence presented by Sir David Nicholson and the Secretary
of State quoted at paragraphs 6 and 8. They state in those paragraphsand
we agreethat delivery of the Nicholson Challenge depends
on fundamental change in the way care is delivered; in the Committee's
view that is simply another way of saying that services need to
be reconfigured.

43. Genuine change in the way services are delivered
will be necessary on both a large and small scale. Our evidence
suggested that NHS organisations are focusing on trimming existing
processes rather than developing new ways to deliver services.
For example, John Appleby of the King's Fund told us:

One of my concerns with QIPP is quite often that
the approach taken is, 'What is our share of the £20 billion
as an organisation? How many millions is it and how do we squeeze
that out of our budgets in, almost, cash terms?' I think the approach
should have been, 'How can we improve care for patients? What
is it they value that we can do more of?' [...] Traditionally,
the NHS's approach to efficiency gains has been to lop the money
off the top, that is not give it to the system in the first place
and then ask questions later, as it were, and exhort the system
to do as much as it can with slightly less money. I have to say,
to an extent, that tactic is still being pursued.[49]

44. Mike Farrar of the NHS Confederation agreed
with this to some extent:

My view is that what we have been doing in year one
[...] is to approach the QIPP challenge in the way in which we
have probably approached efficiencies previously, which is by
small salami slicing around some of our costs. A lot of providers
are trying to get leaner in the way they manage their processes.[50]

45. Dr Judith Smith, head of policy at the Nuffield
Trust, suggested that PCTs were tending to "look at services
at the margin, not at the core spend" and noted that this
approach will make things even harder in subsequent years: "it
is going to be hard for new commissioning groups that are just
getting off the ground if they have to start with those difficult
[core spend] decisions".[51]

46. Although therefore national policy guidance
has emphasised the scale of service change required to deliver
the Nicholson Challenge, the Committee is concerned that local
reality does not reflect the national policy objectives.

47. The Committee is particularly concerned that
the statistical distinction drawn by the Department between 20%
of savings arising from service reconfiguration and 40% arising
from reduced tariff is misleading. National policy guidance emphasises
the importance of substantial service change, while the statistical
presentation appears to suggest that traditional salami slicing
will yield savings which are twice as large as the savings delivered
by service change.

48. The Committee regards tariff reduction as
a tool not a policy. It should be used to promote necessary service
reconfiguration; the danger in the present approach is that it
implies that service change has only a relatively minor contribution
to make to the efficiency gain required to meet the Nicholson
Challenge.

49. The Government's response to the Committee's
2010 Report endorsed this approach. It noted that "changes
to tariff prices do not, in themselves, deliver efficiency improvements
and NHS organisations need to identify underlying efficiencies
to enable them to live within tariff prices".[52]

50. We are concerned that these important points
are not sufficiently well understood. We have already noted that
the squeeze on tariff payments has placed significant pressure
on acute hospital services.[53]
John Appleby of the King's Fund noted that this risked creating
perverse effects:

If you squeeze down too much on price, trusts may
think, "Is it worth us supplying this high cost service?
We can't do anything more about the cost. We simply won't supply
this service anymore and we'll focus on other things".[54]

51. Jo Webber of the NHS Confederation argued
that the tariff was only partially useful: "tariff should
help you to improve productivity, but there are still also the
issues of rising demand and of those services that are not covered
by tariff".[55]
She added that "one could argue that if our demand is due
to long-term conditions and an aging population, then [the tariff]
does not cover, except for very precise episodes, the vast majority
of where the demand is increasing".[56]
Mike Farrar noted that the tariff may be effective in driving
efficiency at an aggregate level, but that it could be a "crude
mechanism" and did not take account of variations at a local
level.[57]

52. The Secretary of State agreed that the tariff
could be described as a "crude mechanism", but only
"if we were not, at the same time, developing the tariff
and the way in which the tariff itself is structured", for
example through the development of best-practice tariffs and extending
tariffs into community services.[58]

53. Sir David Nicholson acknowledged that the
requirement to deliver efficiency gains through service redesign
remained problematic:

The area where we have had least success in year
1and we always knew this would be the caseis the
benefits of service change because it is complicated and difficult
and takes a lead time to do it. [...]. We have offset some of
that [with the savings made in management costs] but, particularly
in years 2 and 3, I think service change will increasingly become
an issue for us to tackle.[59]

54. Both the Foundation Trust Network and the
NHS Confederation noted that service redesign was difficult to
achieve without political support.[60]
But the Confederation warned of the consequences of not making
such changes:

Without action, the NHS as a whole will start to
overspend leading to serious compromises in quality. We therefore
urge politicianslocal and national; government and oppositionto
start to make the case for change, to understand the difficulties
in delivering this change and to back the leadership of the NHS
to deliver it.[61]

55. The Secretary of State acknowledged that
service reconfiguration on a large scale required action at both
national and local levels, for example in developing a telephone
triage system for urgent care.[62]
In terms of political support, he argued that managers could achieve
significant reorganisations "more readily, more successfully
and more quickly" than in the past by ensuring their plans
fulfilled certain tests, which he set out as follows:

Are our GPs supportive as commissioners? Are our
local authorities supportive on the public's behalf? Are our patients
supportive, even if reluctantly, but recognising that it delivers
them the choices they are looking for? Is it clinically safe?
Do we have a clinical evidence base for what we are setting out
to do?[63]

56. The Secretary of State argued that if these
tests were fulfilled managers could have "great confidence"
in achieving the reconfiguration. Sir David Nicholson noted that
there was service redesign "happening all the time"
and that the Department had been encouraging and supporting people
in effecting service change "because we want to improve the
quality of service for patients". He did, however, acknowledge
that it could still be difficult for management to achieve the
political support they required, especially at a local level,
and that getting local agreement was "a really big challenge
for local government as we go forward in all of this".[64]

57. The Nicholson Challenge
can only be achieved through a wide process of service redesign
on both a small and large scale. These changes should not be deferred
until later in the Spending Review period: they must happen early
in the process if they are to release the recurring savings that
will be vital in meeting the challenge. In the meantime, we are
concerned that savings are being made through "salami-slicing"
existing processes instead of rethinking and redesigning the way
services are delivered.

58. The reduction of the tariff
is intended to encourage service redesign. This link needs to
be made much more explicit if there is to be a proper understanding
in the NHS and among the wider public of the scale of service
change which is needed to meet the Nicholson Challenge.

THE IMPACT OF THE WHITE PAPER RESTRUCTURING

59. Sir David Nicholson told us that the Government's
White Paper process had answered the question of how to make QIPP
savings a reality. He said "What we have tried to do since
[the reforms started] is shape the reductions, pointing in the
direction of the new world".[65]
The Secretary of State told us that the restructuring process
was a vital part of delivering the financial challenge:

Where QIPP is concerned, the strategy helps us to
deliver that. If we did not have that strategy, we would still
be sitting here discussing exactly the same financial challenge.
We would still be living with exactly the same kind of challenge
and you would be asking us a lot of questions about why we are
not engaging clinicians more in the process of redesigning services
in order to benefit patients. The fact is we are doing that.[66]

60. The Secretary of State also told us that
the process of PCTs forming clusters as part of the reforms had
reduced demand for managers and senior management staff, helping
to deliver an additional £240 million reduction in administration
costs in 2010-11 above what was expected.[67]

61. However, we also heard evidence that the
restructuring process is frustrating NHS organisations in their
efforts to make savings. The Foundation Trust Network told us
"in the short to medium term there is significant disruption
in relationships as experienced people leave the NHS or are redeployed"
and "with the financial pressures on commissioners, combined
with the changes in personnel and disruption of historic relationships,
there is growing evidence that commissioners are making unsophisticated
attempts to reduce costs".[68]

62. In a similar vein, Judith Smith of the Nuffield
Trust warned that "undertaking that challenge at the time
of major health system reorganisation risks compromising the process";[69]
while John Appleby said "[making efficiencies now] is a more
complicated job, which needs to galvanise the staff to feel enthused
to search out new ways of working and new ways of delivering health
care to patients".[70]Mike Farrar told us that the reforms had distracted his
members and been a factor in organisations "starting slowly"
on their savings plans.[71]

63. The reorganisation process
continues to complicate the push for efficiency gains. Although
it may have facilitated savings in some cases, we heard that it
more often creates disruption and distraction that hinders the
ability of organisations to consider truly effective ways of reforming
service delivery and releasing savings.

Pressure on social care services

64. In its written evidence to our inquiry, the
Department of Health told us:

The Government recognises that the Spending Review
set out a challenging settlement for local government. However,
the Department has sought to achieve a fair and sustainable outcome
by listening to what the local government community has asked
for. It has insulated the councils that are most dependent on
grant funding by giving more weight to the levels of need within
different areas and less weight to per capita distributions. It
has also grouped councils into four bands, reflecting their dependence
on central Government. More dependent authorities have therefore
seen proportionally lower falls than more self-sufficient places.

For 2011-12 and 2012-13, no authority will face more
than an 8.9% reduction in spending power (including income from
council tax and NHS support for social care), with an average
reduction in spending power for 2011-12 of 4.4%.[72]

65. The precise effect of the funding changes
on local authorities' spending on social care is complex. The
Department of Health has stated that it is monitoring budgeted
expenditure data and notes that:

The Department for Communities and Local Government
published 2011-12 budgeted expenditure data on 30 June 2011. This
showed that budgeted net current expenditure on adult social care
was £14,898 million for 2011-12, compared to £14,439
million in 2010-11. These two figures are not directly comparable,
as local authorities have taken responsibility for commissioning
services for people with learning disability from PCTs, funded
through the £1.3 billion Learning Disabilities and Health
Reform grant. The 2011-12 figure also does not include the additional
income of £648 million received by local authorities from
PCTs for spending on social care services that benefit health.
Adjusting the data for these two funding streams suggests a like-for-like
budgeted net current expenditure of £14,220 million in 2011-12.
This represents a budgeted spending reduction of just over £200
million - or around 1.5% - compared to last year.[73]

66. Other data suggest that the difference may
be larger than that 1.5%. The Audit Commission told us:

The picture of the impact on adult social care in
2011/12 from the 2010 Spending Review is far from clear. Data
from several surveys is available, which each give different results.

The Association of Directors of Adult Social
Services survey suggests spending on adult social care has fallen
by 6.8 per cent.

Age UK found that spending on older people had
fallen by 8.4 per cent.

The Department for Communities and Local Government
found the fall was less than 1 per cent.

A CIPFA/BBC survey suggested a 2.6 per cent fall
but with significant regional variation.[74]

67. In oral evidence, the Local Government Group
(LGG) said that they accepted the funding figure, but added that
"we feel it denies [...] the reality of the wider local government
context in which this is set [...] It is our evidence that, in
fact, councils, even with a degree of protection for adult social
care [...] are taking £1 billion out of the system; that
is the reality, rather than £200 million".[75]
In a subsequent joint memorandum, the LGA and ADASS said that
the ADASS survey showed that authorities were making £991m
of savings on adult social care in the current year, caused by
reductions in central funding, growth in demand and inflation
and other cost pressures.[76]

68. Andrew Cozens of the LGG also said that the
overall figure masked the very different challenges facing local
authorities: "It makes a number of assumptions about the
ability of councils to make efficiency savings on an equal basis
across the country, and some councils are already more efficient
than others and there is no mechanism for redistributing the savings
that one council can make which are greater than another to that
other council".[77]
Councillor David Rogers of the LGG said that, "It is important
to recognise that the average that comes from local taxes, from
council tax, is 40% for social care spending and in some areas
it is as high as 80% of the total".[78]

69. Local authorities, like the NHS, are being
asked to cope with reductions in funding through efficiency savings.
The Government says that the necessary programme of efficiencies
is "ambitious", but that:

The Local Government Association and the Association
of Directors of Adult Social Services both suggested, in their
Spending Review submissions to Government, that efficiencies of
3% per annum were achievable in social care. The Department agrees
broadly with this analysis.[79]

70. The Local Government Group told us:

...we estimate that local government faces a funding
gap in the order of £6.5bn in 2011-12. This gap reflects
the difference between what local authorities across England would
need to spend to maintain frontline services in their current
form, and the income they will be able to raise from grants, fees
and charges, business rates and council tax [...]

Councils made savings of more than £3bn between
2005 and 2008 and a further £1.7bn in 2008-09. In 2009-10
councils made efficiency savings of more than £4.8m every
day. Councils know that it is likely that more efficiency savings
can be made, and the LG Group is investing heavily in a national
productivity programme. But efficiency savings are not a quick,
short-term fix and what has to be saved over the next few years
goes far beyond what can be achieved by conventional efficiency
savings.[80]

71. The Committee's own survey of local authorities
found that local authorities are making lower levels of efficiency
savings in social care (3.8% in 2010-11) than across the whole
organisation (4.2%) and proposed increases in efficiency savings
between 2010-11 and 2011-12 are less for social care (91% increase)
than for local authorities as a whole (120%).[81]
Andrew Cozens of the LGG told the Committee, however, that "The
position next year is much more difficult to predict, and it is
also difficult to predict whether councils will be in a position
to continue to protect adult social care in the second year of
the settlement".[82]

72. The Audit Commission encapsulated some of
the problems facing authorities in making efficiencies:

The policy imperative is to transform services to
deliver better outcomes for users. But the pace of change is slow
and is unlikely to deliver short-term, or even possibly long-term,
savings. Indeed, they may require short-term investment. Focusing
management time on transactional efficiencies may deliver savings
but will not deliver all the efficiencies required.[83]

73. The Secretary of State told us that "Our
general calculationour estimate overallis that we
are looking at least at a 3.5% efficiency gain each year in order
to respond to the levels of demand and cost in the service. That
is what we are aiming, at least, to achieve".[84]

74. Andrew Cozens gave a stark assessment of
the position adult social care is in:

It has been our position [...] for some time that
the social care system is close to collapse, if not fundamentally
broken, at this stage simply because it is not able to properly
respond to the demands on it. Therefore, it is reacting as a crisis
service in many respects. That is a trend that I anticipate will
continue.[85]

75. We put the LGG's assessment of the social
care funding gap for 2011-12 to Una O'Brien, Permanent Secretary
at the Department of Health. She thought their concerns were overstated:

[...] the ADASS construction [of the scale of efficiencies
required] is based around an assumption on pay and prices and
on demographic pressure. Our understandingour judgementis
that it is not as large as that. We would not agree with the scale
of what they set out because that is their interpretation of the
demand pressure with pay and prices. Our view of pay and prices
is more conservative than the one they have taken, so we would
not share the scale of the efficiency challenge they have set
out. Notwithstanding that, it still is challenging. Those decisions,
then, are for local authorities in the distribution of their resources
to come to a view about how they are going to manage it.[86]

76. The overall picture of social
care is of a service that is continuing to function by restricting
eligibility, by making greater savings on other local authority
functions and by forcing down the price it pays to contractors
for services. In each case, the scope for further efficiencies
is severely limited. The Government's response to the Dilnot Commission's
proposals due in the first half of this year will, we hope, set
out how a sustainably funded system will continue into the future.
The challenge for local authorities and the Government is to continue
to provide a meaningful service until a new system is in place.

ACCESS TO SERVICES

77. In 2010, Andrew Lansley, the Secretary of
State for Health, told us that under the Spending Review settlement
there was in his view "generally" no need for local
authorities to reduce eligibility to social care.[87]
In our previous Report, we expressed concern that "the evidence
submitted to us, including the evidence submitted by the Government
itself, does not allow us to conclude that the Spending Review
settlement, coupled with the pay freeze, is enough to allow councils
to "sustain" care levels without restricting eligibility
criteria".[88]

78. The Government's evidence to our current
inquiry repeated the view expressed by the Secretary of State
in 2010:

The Government believes that, if councils push forward
with an ambitious programme of efficiency, there is enough funding
available to make it possible to protect people's access to care,
without tightening eligibility.[89]

79. The Government expects local authorities
to make efficiencies of 3% per annum in order to achieve this.
Our previous Report set out why the efficiency gains required
were likely to be closer to 3.5%, and that achieving even 3% would
be extremely challenging.[90]

80. It is clear that there have been changes
in eligibility criteria. Of the 148 councils that responded to
the 2011 Budget survey by the Association of Directors of Social
Services (ADASS), 15 had raised their eligibility criteria between
2010-11 and 2011-12 from 'moderate' to 'substantial'.[91]
The Association of Directors of Social Services (ADASS) told the
Committee that in most of England eligibility is now restricted
to those with needs which are 'significant'[92]
or higher:

The ADASS Budget Survey 2011 analysis confirmed the
extent of pressures being faced by Adult Social Care, identifying
£1billion worth of reductions from 2011/12 Adult Social Care
budgets and a corresponding movement in raising the eligibility
threshold, with 13% councils raising eligibility and 82% councils
now only providing services at significant or above levels of
eligibility. This shift restricts the extent of future headroom
for "planned" reductions over the spending review period
being absorbed by "efficiencies" as opposed to service
reductions.[93]

81. The Local Government Group agreed that there
would be considerable pressure on councils' ability to maintain
care services on current eligibility criteria in the coming years.[94]
Andrew Cozens of the Local Government Group told us that:

It is too early to say what the impact will be on
quality, but it certainly continues the trend of services being
maintained for those inside the tent but with greater difficulties
for those with lesser need in getting access to service. That
is reflected both in the changes to eligibility criteria but also
in the intention, for example, to reduce expenditure on care home
placements and to try and cap fee levels and other issues of this
kind.[95]

82. In evidence for this inquiry the Secretary
of State described the changes to eligibility criteria as "limited"[96]
in comparison with 2010-11 and said that "generally speaking,
[councils] have not had to reduce their eligibility".[97]
He did, however, note that nearly £116m of the £648m
being passported through the NHS for spending on social care,
and intended to support integration of the two services, had been
spent on maintaining eligibility criteria.[98]

83. Una O'Brien, Permanent Secretary at the Department
of Health, told us "we are disappointed where local authorities
have made those decisions [to raise eligibility thresholds]"
and said that the Spending Review arrangements were really a question
of trying "to hold the position steady" until the establishment
of a new and different funding system for social care.[99]

84. In spite of Government assurances,
local authorities are having to raise eligibility criteria in
order to maintain social care services to those in greatest need.

85. It is deeply concerning
that £116m of the £648m intended to be spent through
the NHS on improving the interface between health and social care
is being spent on sustaining existing eligibility criteria. This
suggests that this money (which was intended to support greater
integration of services) is in fact being used to maintain the
existing system. To the extent that this is true it is a lost
opportunity to promote the necessary process of service integration.

86. ADASS has found that 82%
of councils are only providing care to those whose needs are assessed
as significant or higher. The Permanent Secretary at the Department
of Health told us that the settlement was intended to "hold
the position steady" until a new funding system for social
care was developed. The tightening of eligibility criteria demonstrates
that the settlement is not sufficient to achieve this.

Integration of health and social
care

87. The Committee welcomed the higher priority
which Government accorded to the greater integration of health
and social care following the report of the NHS Future Forum in
2011. We believe this approach is the only realistic option which
is capable of delivering service change on the scale required
to respond to the Nicholson Challenge. We were therefore keen
to assess the progress which has been made with the delivery of
the objectives which the Government embraced during 2011.

88. During our previous inquiry, the LGA and
ADASS told us that relationships between the two sectors was improving.
This time, ADASS said:

[...] the maturing relationship [...] has seen integrated
commissioning and existence of joint teams becoming common-place
and the development of a shared, integrated outcomes framework
binding the focus of health, public health and councils together.
The attention upon the "patient pathway" and the mix
of the health model of treatment alongside the social model of
care has created an environment in which the inter-dependencies
between two different cultures / organisations are now understood
and evolving.[100]

89. On the other hand, the Audit Commission told
us that their "analysis of adult social services efficiencies
in 2009-10, and those planned for 2010-11, shows that integration
and working more closely with the NHS was one of the least common
ways of achieving savings".[101]

90. We asked the Secretary of State what mechanisms
or incentives were in place to encourage integration and co-operation.
He told us:

The NHS financial support to local authorities is
a direct incentive to [join up]. It is focused on trying to deliver
that kind of joint preventative approach. We make it very clear
and [...] the Bill [...] makes it clear that we are not only sustaining
the legal mechanisms by which local authorities with social care
responsibilities can go down the route of pooled budgets or joint
commissioning. We are creating in the legislation a statutory
duty to promote integrated care between health and social care
which was not previously there. We are creating a statutory incentive
and we have a financial incentive.[102]

91. The Secretary of State did caution, however,
that the two distinct funding systems limited the ability to integrate
services:

Yes, we can get joint commissioning and pooled budgets,
but we are not in a position where we can ignore the simple fact
that they are separately funded. One is local authority funded,
subject to a means test, and the other is NHS funded, not subject
to any means test and free. The management of bringing those things
together is inevitably going to be a co-ordination mechanism rather
than a simple integration.[103]

92. Councillor Rogers of the LGG and Jo Webber
of the NHS Confederation both argued that Health and Wellbeing
Boards could have a key role to play in enhancing integration.[104]
As Jo Webber told us, it is the only mechanism available to do
this:

They will be very good if the joint strategic needs
assessment works across the whole of the local community and that
is the basis of some very joined­up planning. When you look
at the reforms, there is not anywhere else locally where that
planning is going to take place. It has to take place at the Health
and Wellbeing Board level.[105]

93. Mike Farrar warned that there needed to be
greater common understanding of what integration means:

The key thing in the short term is that there has
been a rally round the phrase "integration", but in
operationalising the nature of integration many people out in
the system who are critical to whether we get these benefits have
very different understandings and expectations of what that means
in practice. It would be incredibly useful, while the Bill is
still progressing, if we are going to have a legal duty around
it, to have a degree of clarity about the expectation and try
and get people on the same hymn sheet.[106]

94. A January 2012 joint report
by the King's Fund and the Nuffield Trust, on the integration
of health and social care, called on the Department of Health
and the NHS Commissioning Board to "develop a consistent
and compelling narrative that puts well-co-ordinated care for
people with complex needs at the heart of what is required of
local NHS and social care organisations" and to set "a
clear, ambitious and measurable goal linked to the individual's
experiences of integrated care that must be delivered by a defined
date".[107]

95. Although the Committee welcomes
the continuing interest and support for the priority accorded
by the NHS Future Forum to greater service integration, it found
precious little evidence of the urgency which it believes this
issue demandson both quality and efficiency grounds. It
is a question to which the Committee will return in its Report
on Social Care. In the meantime it calls on the Government and
local authorities to set out how they intend to translate this
aspiration for greater service integration into the reality of
patient experience.

INVESTMENT OF NHS FUNDS IN SOCIAL
CARE

96. In the Spending Review the Government did
provide that there would be some funding from the NHS budget for
use on social care. We said in our previous report that this money
ought to be distributed with the primary aim of developing a better
overall interaction between health and social care rather than
simply spent on specific services, and this remains our view.[108]
In its response to our previous Report, the Government said:

The Operating Framework specifically requires that
PCTs will need to work together with local authorities to agree
jointly on appropriate areas for social care investment and the
outcomes expected from this investment. The Department of Health
would expect these decisions to take into account the Joint Strategic
Needs Assessment (JSNA) for their local population, and the existing
commissioning plans for both health and social care. This is specifically
to ensure that this funding is not used in isolation from the
other plans for health and social care services in any locality
to ensure that the funding provides the greatest additional value
[...] PCTs should work together with local authorities to achieve
these outcomes in a transparent and efficient manner, with local
authorities keeping PCTs informed of progress using appropriate
local mechanisms.[109]

The Department also told us that "This represents
an important mechanism for encouraging PCTs and local authorities
to work outside of traditional silos, and to collaborate in order
to achieve maximum impact for their investment".[110]

97. The Audit Commission suggested that how well
the money was being used depended largely on pre-existing relationships:

It is too early for robust evidence on how the additional
funding is being used. The experience and views of our local auditors
is that areas with a strong history of partnership working are
collaborating on how best to use the funding to benefit the whole
system. Where relationships are less strong, it seems that agreeing
shared priorities and allocating funding has been less smooth.[111]

98. ADASS told us: "The recent transfer
of £648m from Primary Care Trusts (PCTs) to councils (2011-12)
is seen as a positive move in this shared understanding, and the
ADASS 2011 Budget Survey affirmed that this allocation has been
largely transferred across, of which 24% is to be deployed to
avoid cuts to services, 10% to cover demographic pressures, 9%
to spend on additional services, and 57% yet to be decided."[112]
On that undecided 57%, the Local Government Group said:

Where those decisions are still to be made our anecdotal
evidence is that this illustrates the, at times, difficult discussions
on whether the money should be used as a substitute for services,
for expanding existing services, or for meeting NHS demand for
100% additionality.[113]

99. On 24 August 2011 a letter was sent to all
Directors of Finance at PCTs from David Behan (Director General,
Social Care, Local Government and Care Partnerships, Department
of Health) and David Flory (Deputy NHS Chief Executive) to establish
how this year's allocation of £648m is being spent, under
seven broad categories. The Secretary of State told us:

It is interesting, looking at the data we have about
the structure of the transfer from the NHS to support social care
of £648 million in this financial year, for which the data
has been returned to us about how this money is to be used, that
nearly £116 million is for maintaining eligibility criteria,
so there is an issue in terms of that. When you begin to look
at all the other things that are being done, it is about community
equipment and adaptation, £32 million, £28 million plus
for telecareI was mentioning those opportunitiesintegrated
crisis and rapid response services are £50 million, and both
in South Birmingham and Kirklees, where I have been, that makes
an enormous difference. It is free for those who are getting access
to that service but it is doing an enormous amount to establish
people in a preventative way rather than simply letting them fall
into care need and then providing them with an expensive package
over a long period of time. There is £117 million for reablement
services, £50 million plus for early supported hospital discharge
schemes, and bed­based intermediate care services at £61
million. There is a range of different responses which are meshing
the NHS and social care together.[114]

100. Una O'Brien argued that the decision to
passport a sum of money for social care via the NHS was encouraging
new initiatives:

You are seeing in that something that is new, the
forcing of that conversation by the availability of a pot of money
coming through the NHS side, the bringing of local authority social
services and health together where there is a common interest
around the needs of their patients. While you might say the mechanisms
are not being forced from the centre, we are certainly enabling,
supporting and driving that "jointness". For example,
the operating framework goes out to all directors of social services
and chief executives of local authorities, bringing people into
a wider community of responsibility for addressing people's needs
so that we are not, if you like, limited by the route down which
money flows. Obviously, we are bound by the legislative framework
for social care, and what we are trying do is work within that
as constructively as we possibly can.[115]

101. Early reports from the
Health Service are that the transfer of money from the NHS to
be spent on social care has been effective. That effectiveness
may be because there was a very straightforward control mechanism:
the money had to be spent by agreement. We do not underestimate
the importance of this transfer, but the fact remains that it
represents just 1% of annual funding for the NHS. Clearly there
is scope to extend transfers of this kind.

102. In evidence to our inquiry on social care,
Andrew Dilnot and his colleagues from the Commission on Funding
of Care and Support pointed out that of the almost £150 billion
spent per year on service and welfare/disability benefits for
elderly people, only £8 billion is spent on social care services
and around £50 billion by the NHS. A rebalancing of that
expenditure, for example, could bring substantial benefits for
quality of service, quality of life and cost-effectiveness. The
Committee believes that, as a matter of urgency, the Department
of Health should investigate the practicalities of greater passporting
of NHS funding to social care.